Know Before You Owe: Mortgage shopping study

MAY 15, 2018

To examine whether encouraging mortgage shopping benefits consumers, researchers from the Office of Research of the Bureau of Consumer Financial Protection conducted a study of prospective homebuyers in 2016. The study found, among other things, that "encouraged shopping"—the additional shopping prompted by encouraging borrowers to shop—increases consumers’ knowledge of the mortgage market and increases consumers’ self-confidence in their ability to deal with mortgage-related issues. The study also provided suggestive evidence that encouraged shopping may reduce the cost of consumers’ mortgages.

Mortgage interest rates and loan terms can vary considerably across lenders. Despite this fact, many homebuyers do not comparison shop for their mortgages. In recent studies, more than 30 percent of borrowers reported not comparison shopping for their mortgage, and more than 75 percent of borrowers reported applying for a mortgage with only one lender. Previous Bureau research suggests that failing to comparison shop for a mortgage costs the average homebuyer approximately $300 per year and many thousands of dollars over the life of the loan.